Hong Kong's benchmark index recouped steep early losses of more than 1,000 points to end up Tuesday ahead of Wednesday's holiday.

The Hang Seng index closed up 135.53 points or 0.76 percent at 18,016.21,off a low of 16,799.29 and high of 18,029.77.

Turnover climbed to 71.81 billion HK dollars (9.26 billion U.S. dollars) from Monday's 54.97 billion HK dollars (7.08 billion U.S. dollars).

The U.S. House of Representatives' rejection of the 700 billion U.S. dollars bailout package for the financial sector sent Hong Kong index 982.35 points lower at the market's opening and extended to 1,081.39 points loss shortly afterward.

The main index recorded its worst quarterly decline since the September 2001 airliner attacks on the United States amid a flurry of bank failures and bailouts that changed the landscape of Wall Street.

But investors finally pared the losses throughout the day and pushed local shares into positive territory in the last hour of trade, hoping that U.S. lawmakers will eventually pass some legislation to help the financial sector.

The Hang Seng Index has fallen 35 percent since the start of this year, and analysts said its current attractive valuation should provide support in the short term.

Heavyweight China Mobile rose 2.5 percent to 76.90 HK dollars after a 3.6 percent drop and China Netcom gained 4.5 percent to 17. 18 HK dollars after it dropped 3.3 percent in the morning session.

China Construction Bank gained 2.7 percent to 5.04 HK dollars after a 6.1 percent drop Monday. China Life Insurance ended 2 percent higher at 28.55 HK dollars after losing 4.6 percent in the previous session.

Utility firms rose sharply as investors sought safe havens. CLP rose 4.1 percent to 62.35 HK dollars and Hong Kong Electric ended 4.2 percent higher at 48.50 HK dollars.

(Xinhua News Agency October 1, 2008)